BIR Ruling

March 1, 1972 The Director Revenue Region No. 1 Baguio City S i r : This refers to your letter dated November 19, 1971 requesting a ruling on the taxability of Social Security pensions being received from the U.S. Government's Social Security Commission by persons residing in the Philippines. In reply thereto, I have the honor to inform you that every individual, whether a citizen of the Philippines residing therein or abroad or an alien residing in the Philippines shall be subject to income tax on their taxable net income received during each taxable year from all sources in accordance with the rates prescribed by Section 21 of the Tax Code, as amended by Republic Act No. 5225. Republic Act No. 4917 is by express provision applicable only to retirement benefits of officials and employees of private firms in the Philippines. The tax exemption under Republic Act No. 360 as regards the pensions, compensations, and other benefits granted or administered by the U.S. Veterans Administration applies only to Filipino and U.S. Veterans residing in the Philippines. The tax exemption under Republic Act No. 1161 as regards the pensions and benefits granted and received from the Philippine Social Security System applies only to retired officials and employees of private firms in the Philippines. In view thereof, and considering that there is no law declaring U.S. Social Security pensions and/or benefits received by retired federal employees, whether Filipino citizens or resident aliens, exempt from Philippine income tax, the pensioner is required to file his income tax return every year if his total gross income which includes said pension received each year amounts to one thousand eight hundred (P1,800.00) pesos or more. (Sec. 45, N.I.R.C.) Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue